If you answered “yes” to both questions, you may want to explore usage-based auto insurance.

Usage-based auto insurance is coverage based on driving behaviour. With the car owner’s permission, an insurance company will install a telematics device in a vehicle to collect real-time data about driving habits (some companies offer a downloadable mobile app that performs the same function and which is activated when a vehicle is in motion).

The device (or app) monitors such activity as the distance a car has been driven, vehicle speed, and the frequency and severity of braking and acceleration.

If the data reveals good driving habits, then the driver is eligible to receive discounted insurance premiums. In some cases, discounts can be as high as 30 per cent. Rest assured — insurance providers will not penalize drivers with higher premiums based on collected data.

Auto data tracking has been permitted in Canada for about eight years, and it has been widely adopted in the U.S., Europe and Japan. Insurers in those countries claim that data tracking has led to fewer insurance claims, fewer accidents, and lower premiums for good drivers.

In Canada, three major insurers offer usage-based coverage, but not all programs are offered in all provinces. One insurance provider (Co-Operators) offers customers the ability to monitor their driving stats by visiting an online portal.

Could information collected by insurance companies be used for anything other than determining insurance premiums? Insurance companies deny the suggestion and claim that information they collect is only used to establish lower insurance premiums.

But there is still skepticism among consumers, which is entirely warranted. The recent Facebook, Equifax and other, high-profile data breaches have left consumers worried about the privacy and the safety of their information in an increasingly data-driven age.

Several years ago, it was reported that American and British governments had secretly collected data from telephone and internet providers. Many Canadians are concerned that similar surveillance could occur in this country (if it has not already).

In addition to privacy concerns, there are legal issues in tracking vehicle data. Driving information collected by an insurance company could be subpoenaed for evidence in a trial, and the insurance company would have to comply with a court order and surrender that information.

Collected information could also be hacked.

Installing a telematics device on a vehicle could be interpreted as an invasion of privacy, but more of our daily activities are being monitored all the time. Webcams in public spaces, online shopping habits and mobile devices are providing companies with more personal information than we realize.

If usage based auto insurance is something that you feel is right for you, then consider the following:

Are you a good driver who obeys traffic laws, and do you drive frequently?

Ask the insurance provider what information will be collected and how it will be used, and whether the company will track your location (not all providers do). Read the fine print of any program that you are interested in.

Determine if there will be more than one driver monitored, as the programs do not differentiate between drivers. Installing a usage-based device could provide an opportunity to discuss driving safety with someone in your family with whom you share a vehicle (particularly a younger driver).

From my vantage point, auto data-tracking is a win-win for drivers. For those who are interested in this option, installing a device on a car would encourage drivers to slow down and drive more carefully, making our roads safer, and provide lower insurance premiums as well.

This column represents the views and values of the TADA. Write to [email protected] or go to tada.ca. Susan Gubasta is president of the Trillium Automobile Dealers Association and is President/CEO of Mississauga Toyota.

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